Maruti posts 28.7% rise in Q2 profit, warns of slowdown in H2

Country’s largest car maker Maruti Suzuki India reported a 28.7 per cent year-on-year jump in net profit to Rs 862.5 crore for the second quarter driven by strong sales growth. Volumes during the quarter were up 16.8 per cent over the year-ago period, while sales rose by 17.5 per cent.

“The situation is not as bright as many people hoped it would be at this point. We do not expect that the growth in sales of Maruti will be as high as in the first half and this will slow down,” said RC Bhargava, chairman, Maruti Suzuki India (MSIL), adding that volumes may still grow at over 10 per cent in the ongoing financial year. While the company is looking to come out with various products going forward, Bhargava said that a sport utility vehicle (SUV) will be launched in the first quarter of next year and the compact SUV will come a year after that launch.

Sitting on a cash reserve of Rs 9,000 crore the company said that it will invest in marketing infrastructure, research and development, technology and in various products going forward. The company also proposed to pay a higher dividend as MSIL announced that its board has approved a dividend payout guideline which calls for dividend payout to be in the range of 18 and 30 per cent each year. In the year ended March 2014, the company had a dividend payout ratio of 15 per cent.

In another development, MSIL announced that its board of directors has recommended to raise the FII shareholding limit from existing 24 per cent to 40 per cent, subject to RBI approval.